Domain Editorial Director

This apartment at 1/30 Ashburner Street, Manly, sold at auction on Saturday for $817,500 - $117,500 over the reserve.

There is a growing contradiction in the Sydney property market - the more the market improves the more sellers turn their back on it.

The number of properties listed for sale has fallen again over July, down 2.1 per cent on June.

The figures released by SQM Research show that there were 23,207 homes on the market last month - 17 per cent below July 2012.

The election is certainly playing a part in sellers' reluctance to go to market but experts say that is not the only factor at play.

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"There is no doubt an aspect of greed," said Louis Christopher, managing director of SQM Research.

"Sellers are holding off in the hopes of getting higher prices down the track."

Mr Christopher said the sustained improvement in the property market has reinvigorated the idea that property as an asset will continue to improve in value.

"The last time Sydney had a sustained property recovery was really from 2001 to 2003," he said.

"It has been a long time since Sydney has really seen a strong real estate recovery and this may well be it."

AMP Capital chief economist Shane Oliver said while it was a "surprise" to see listings down on last year, it most likely reflected overconfident sellers.

"Sellers are working on the assumption that the strengthening buyer demand will continue post-election," he said. "And it probably will."

The regions with the lowest number of listings are the areas that were hit hardest by the GFC.

Listings on the northern beaches are down 26.4 per cent on the same time last year.

But in some parts of the peninsula vendors are capitalising on the shortage of listings.

An apartment at 1/30 Ashburner Street, Manly, sold at auction on Saturday for $817,500 - $117,500 over the reserve.

The two-bedroom apartment was bought by an investor who saw the property for the first time an hour before the auction.

Selling agent Anthony O'Gorman for O'Gorman and Partners said the lack of stock was breeding "fierce" buyers.

"Purely through the competition between buyers prices have surged," he said.

Another severely undersupplied market is the lower north shore, where listings are down 26.2 per cent on the same time last year.

As a result the Saturday auction market on the lower north shore has been very competitive.

The lower north shore recorded the best regional result in Sydney on Saturday with a clearance rate of 87 per cent.

Strong competition between buyers has pushed prices up.

The latest data from Australian Property Monitors showed the median house price for the lower north shore rose by 10.9 per cent over the June quarter to an all-time high of $1.5 million.

Though SQM Research findings show overall listings are down, the senior economist at APM, Andrew Wilson, points to an increase in auction numbers.

Over the month of July, 1577 properties went under the hammer - 16.5 per cent more than the same month last year.

92 comments

What these sellers are failing to recognise is that we are still in a long term bubble, and the economy is headed for a recession and higher unemployment. The property market is still deluded and ignoring the economic indicators.

Commenter

MaxCarter

Location

Date and time

August 06, 2013, 11:01AM

It's simple: DON'T BUY NOW! The bubble is still alive and well, but across the plains, coming ever closer, is the moment of reckoning. Renting is not so bad, and it's much better than losing 50% of capital.

Commenter

Revert2Mean

Location

Date and time

August 06, 2013, 11:36AM

Maybe the sellers have realised its a bubble (just kidding).

Maybe there no point in turning over property every 3 years any more. The growth is not high enough... not like in the early 2000s.

Maybe that's why there is less stock.

Commenter

cranky

Location

pants

Date and time

August 06, 2013, 11:57AM

The Australian economy is definitely heading for stormy waters. Unemployment is forecast to go higher than it was in the GFC to 6.25%. Seems like every day there's another swag of bad economic news. Not sure I'd be leveraging myself to the hilt into Australian property in this situation. But hey, they say Aussies love a gamble so guess we'll see what happens one way or the other:)

Commenter

Jacob

Location

Date and time

August 06, 2013, 12:01PM

I think that some of Sydney is in a bubble - eg when pretty plain 3 bedroom houses in nondescript suburbs such as Beverly Hills (no offense) are costing up to $1m, that's crazy. But other parts, eg the city, inner east/west and Balmain peninsula, aren't people always going to want to live there?

Commenter

Rock_j

Date and time

August 06, 2013, 12:03PM

I think house prices are high here but no more so than the other bigworld cities. Look at house prices in London pre and post GFC -they went up, didn't even blink. Are some people on here honestly betting on Syd mean average prices dropping to 400k! Rural maybe.

Commenter

Bob

Location

Syd

Date and time

August 06, 2013, 12:58PM

Fear makes everybody underperform. Well done!

Commenter

Andy

Location

Date and time

August 06, 2013, 1:01PM

A recovery? I don't remember Fairfax reporting that the market had fallen. Must have missed that. Toby, did it occur to you that prices might be rising BECAUSE there are less on the market?

Commenter

McAlla

Location

Sydney

Date and time

August 06, 2013, 11:05AM

+1

Commenter

Tricky

Location

Date and time

August 06, 2013, 11:39AM

That is not the only reason they are 'rising' - lets not forget that the reporting that a suburb's 'median' or 'average' price is going up does not mean a house in that suburb is worth more as time goes by - it means that it is more expensive to buy a house in that suburb. The difference being that as we all renovate the average/median price continues to climb - even if you are spending more on your reno than you get back when you sell it. The sad reality at present is that house prices are barely matching inflation even when they are warped by the effect of renovations. In other words, house prices have been falling in real terms for quite some time.